multilateral peer review and capacity building.’79 The OECD’s table of procedural transparency and predictability speaks volumes about serious wider deficiencies in the accountability regime at national recipient level. The lack of formal requirements to publicly announce outcomes, table reports to legislative bodies or publish an annual report with sufficient information to ascertain review patterns is the norm in all countries surveyed, with the exception of the United States and (partially) Australia. Introducing policy changes in an incremental manner through bilateral agreements, as in the United States, runs counter to OECD principles. In Australia, the articulation of Foreign Investment Review Board principles was not subject to external debate or validation. Rather, the initiative was presented as a bureaucratic clarification. As such, it did not require prior notification to or consultation with interested parties. In both cases, the introduction of new criteria to adjudication state-owned or controlled investment entities reflect discriminatory impulses. 80
Given their role in providing liquidity to the financial sector, it is inevitable that Sovereign Wealth Funds have entered onto the political radar. As examined above, however, additional geopolitical concerns complicates matters considerably. It is entirely appropriate for national governments to protect legitimate national interests. If the process is opaque, however, there may be a concomitant undermining of legitimacy. Authority requires clearly defined parameters. In addition, the rationale must be explained and the rules applied in a proportionate impartial manner. To do otherwise obviates longstanding principles of equity in international investment. As such, proposals to regulate Sovereign Wealth Funds must be linked to foreign direct investment processes and to a wider recalibration of what is expected of institutional shareholders in the control of major corporations. The dramatic increase in Chinese, Russian and Gulf-based investments makes this unsustainable in the longer term. At the same time, it is also clear that the generation of new norms or principles of best practice need to take account of changing power relations. The transfer of capital from south to north and east to west partially rebalances the centre of political and economic power and reveals, in the process, glaring deficiencies in western conceptions of what constitutes – or should constitute – regulatory best practice. 81
III ACHIEVING ACCOUNTABILITY
While Sovereign Wealth Funds have traditionally shunned the media spotlight, there are already clear signs of bristling at what is seen as a partial and self-serving rewriting of the rules governing financial globalisation. This is most notable in the case of the Abu Dhabi Investment Authority. The emirate remains deeply suspicious of the benefits of disclosure; its website consists of five sparsely populated pages. Nonetheless a clear message has been transmitted to Washington. The investment authority has stated explicitly that the Abu Dhabi ‘government has never and will never use its investment organisations or individual investments as a foreign policy tool’.82 It emphasises that financial experts manage 80% of its investments. ADIA, it
Ibid, at 9.
81 Recently announced plans to change the governance structure of the IMF reflect and reinforce this broader shift; see Report of the Executive Board to the Board of Governors, Reform of Quota and Voice in the International Monetary Fund (Washington DC, 28 March 2009)
82Otaiba, above n 61.